The Fed Blog

Wednesday, June 28, 2017

Global Demography: Birth Dearth & Urbanization

The Voluntary Human Extinction Movement (VHEMT) was founded in 1991 by Les U. Knight, a high-school substitute teacher who lives in Portland, Oregon. He and his followers believe that human extinction is the best solution to the problems facing the Earth’s biosphere and humanity. The VHEMT website shows that the group’s motto is “May we live long and die out.” Their Facebook page sells tee-shirts declaring: “When You Breed, the Planet Bleeds.” Another declares: “Thank You for Not Breeding.” Sure enough, the pace of human breeding has slowed, but for reasons that have nothing to do with VHEMT.

All around the world, humans are not having enough babies to replace themselves. There are a few significant exceptions, such as India and the continent of Africa. Working-age populations are projected to decline along with populations in coming years in most of Asia (excluding India), Europe, and Latin America. The US has a brighter future, though the pace of population growth is projected to slow significantly in coming years.

There are many explanations for the decline in fertility rates around the world to below the replacement rate, which is estimated to be 2.1 children born per woman in developed countries. It is higher in some developing countries that have higher mortality rates.

I believe that the most logical explanation is urbanization. The United Nations estimates that the percentage of the world population that has been urbanized rose from 29.6% in 1950 to just over 50.0% during 2008. This percentage is projected to rise to 66.4% by 2050. The world fertility rate was around 5.0 births per woman in the mid-1950s. It fell to 2.5 in 2015. The UN projects it will fall to 2.0 by the end of this century.

Families are likely to have more children in rural communities than urban ones. Housing is cheaper in the former than in the latter. In addition, rural populations are much more dependent on agricultural employment. They are likely to view every child as contributing to a family’s economic well-being once he or she is old enough to work in the field or tend the livestock. Adult children also are expected to support and to care for their extended families by housing and feeding their aging parents in their own huts and yurts.

In urban environments, children tend to be expensive to house, feed, and educate. When they become urban-dwelling adults, they are less likely to welcome an extended-family living arrangement, with their aging parents living with them in a cramped city apartment. A UN report titled “World Urbanization Prospects: The 2014 Revision,” noted, “The process of urbanization historically has been associated with other important economic and social transformations, which have brought greater geographic mobility, lower fertility, longer life expectancy and population ageing.”

In my opinion, the urbanization trend since the end of World War II was attributable in large part to the “Green Revolution,” the term coined by William Gaud, the former director of the US Agency for International Development, a.k.a. USAID, to give a name to the spread of new agricultural technologies: “These and other developments in the field of agriculture contain the makings of a new revolution. It is not a violent Red Revolution like that of the Soviets, nor is it a White Revolution like that of the Shah of Iran. I call it the Green Revolution.”

In 1970, Norman Borlaug—often called “the Father of the Green Revolution”—won the Nobel Peace Prize. A January 1997 article about him written by Gregg Easterbrook in The Atlantic was titled “Forgotten Benefactor of Humanity.” Easterbrook wrote that the agronomist’s techniques for high-yield agriculture were “responsible for the fact that throughout the postwar era, except in sub-Saharan Africa, global food production has expanded faster than the human population, averting the mass starvations that were widely predicted.” Borlaug may have prevented a billion deaths as a result.

The resulting productivity boom in agriculture eliminated lots of jobs and forced small farmers to sell their plots to large agricultural enterprises that could use the latest technologies to feed many more people in the cities with fewer workers in the fields. Ironically, then, the Green Revolution provided enough food to feed a population explosion. Instead of working the land on family farms, much of the population moved to the cities and had fewer kids! Good old Tommy Malthus, the dismal scientist of economics and demographics, never anticipated ag tech and urbanization.

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ABOUT: Dr. Ed Yardeni is the President and Chief Investment Strategist of Yardeni Research, Inc., a provider of independent investment strategy and economics research. This blog highlights excerpts from our research service, which is designed for investment and business professionals.

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